Legislative mandates, plunging costs, but also consumer demand push shift
by Allen Best
The rapid shift to renewables has three, and perhaps four powerful guiding forces. First were the legislative mandates to decarbonize electrical supplies. Colorado in 2019 set targets of 50% reduction economy wide by 2030 and 90% by 2040. New Mexico, a second state where Tri-State operates, has comparable goals.
A second and now more powerful driver pushing renewables have been plunging prices.
“It’s no longer just a green movement, it’s an economic movement,” said Duane Highley, chief executive of Tri-State Generation and Transmission, which delivers electricity to 43 member cooperatives in Colorado and three other states.
Tri-State recently signed contracts for 1,000 megawatts of wind and solar energy that will be coming online by 2024 at average price of 1.7 cents per kilowatt-hour.
“That’s an amazing price. That’s lower than anything we can generate with fossil fuels. It automatically gives us the head room, because of the savings just on energy, to accelerate the retirement of coal and do that affordably with no increases in rates,” said Highley. “We see downward rate pressure for the next 10 years, and beyond 2030, we see increases below the rate of inflation.”
The economics prevail in states that have not adopted mandates designed to reduce emissions.
“We see a green energy dividend that allows us to accelerate the closure of coal without raising rates. That’s a key and it’s a key for Tri-State to getting support from our board, which covers four states. Nebraska and Wyoming don’t have the same intensity of passion behind the renewable energy movement that New Mexico and Colorado do. But one thing all of our members can agree upon is low rates and low costs.”
At Holy Cross Energy, an electrical cooperative that is not supplied by Tri-State, chief executive Bryan Hannegan sees the same downward price pressures.
“The price of new power supply from the bulk grid is coming in below where we are today in the marketplace. That is actually putting downward pressure on rates,” he said. At Holy Cross, the cost of electricity accounts for half of what consumers pay, with the other half going to the poles, wires, trucks and overhead.
“We at Holy Cross are saying we will get to 70% clean energy by 2030 with no increase in our power supply costs. If we can do it—which is a big if—we will try to do it in a way that keeps our rates predictable and stable.”
A third driver of the move to renewables has been bottom-up pressure from customers. Both Vail Resorts and the Aspen Skiing Co. have pushed Holy Cross Energy to deliver energy untainted by carbon emissions. So have individual communities. Six of the member communities in Colorado Communities for Climate Action are served by Holy Cross. “That is driving us forward. We are hearing it from our customer base,” said Hannegan.
Yet a fourth driver may be choice, as consumers can demand to pick and choose their energy sources as is proposed in a bill about community choice aggregation introduced in the Colorado Legislature this year. Holy Cross has to deliver that clean energy “frankly before somebody else does.”
All three utilities represented on the webinar retain ownership in coal plants. Holy Cross Energy, however, has consigned the production from its small ownership of Comanche 3, located in Pueblo, Colo., to Guzman Energy. Both Tri-State and Platte River have plans to be out of coal in Colorado by 2030, although Tri-State has no plans yet announced to end importing coal from a coal plant at Wheatland, Wyo.